AMI Australia Holdings Pty Ltd v PHD Networks Pty Ltd

Supreme Court of NSW|2010-12-14|Before: Macready J

Judgment 1This is an application under s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand served by the defendant on the plaintiff for payment of a debt. The statutory demand claims the amount of $2,240,981.32. The description of the debt in the schedule to the demand refers to unpaid invoices rendered by the defendant to the plaintiff during the period of 31 October 2009 to 15 January 2010. The invoices were for placing the plaintiff's product advertisements in the media. 2The plaintiff moves for an order setting aside the statutory demand, principally on the basis that there is no debt of a s 459E kind or the demand was made on the wrong entity. Alternatively, the plaintiff seeks an order under s 459H reducing the amount of the demand by the amount of an offsetting claim. 3The plaintiff relies on eleven grounds for setting aside the statutory demand. They can be generally described as encompassing the following issues: whether a contract between the parties existed, its possible terms and its possible variation(s); whether the plaintiff is the correct debtor company; whether the entire debt was due and payable at the time the demand was issued; whether the defendant was the plaintiff's agent at law; an offsetting claim in malicious falsehood and an offsetting claim pursuant to section 52 Trade Practices Act 1974 (Cth); and finally, whether there are defects in the affidavit accompanying the demand that should result in the demand being set aside. 4The plaintiff's application to set aside the statutory demand is supported by the affidavit of Mr Jacov Vaisman dated 10 June 2010 and a further affidavit sworn 26 November 2010. Mr Vaisman is the director and secretary of the plaintiff and its wholly owned subsidiary, Advanced Medical Institute Pty Ltd (AMIPL). 5Since there are questions as to whether it was the plaintiff or AMIPL that engaged the service of the defendant it is worth setting out some chronological facts that can be ascertained from the evidence.

Background 6The parties have made helpful submissions that I amend and incorporate into this judgment. 7An ASIC current and historical extract of the plaintiff (ABN: 56 095 238 645, ACN: 095 238 645) reveals that from 29 November 2000 to 29 November 2005, the plaintiff was known as "Advanced Medical Institute Pty Limited". 8The business name "Advanced Medical Institute" was registered to the plaintiff on 6 June 2003 and ceased to be registered to that company on 8 September 2006. 9On 30 November 2005, the plaintiff changed its name from "Advanced Medical Institute Pty Ltd" to "AMI Australia Holdings Pty Ltd". 10On or about 19 February 2004, the defendant (then known as Total Advertising & Communications Pty Ltd) received a formal request from "AMI Advanced Medical Institute of Australia", ABN: 56 095 238 645, to act as its media billing agency of record. 11On 25 February 2004, the defendant obtained a trade credit insurance policy with QBE Trade Credit ("QBE") in respect of the plaintiff. 12On 11 March 2004, the defendant and the plaintiff entered into a confidentiality agreement. Part of the confidentiality agreement stated: " RECITALS A. TOTAL will place advertising in Australian media for Advanced Medical Institute of Australia. B. TOTAL will negotiate media rates for Advanced Medical Institute of Australia and such rates are exclusive to clients of TOTAL." 13On 17 October 2005, the defendant received a formal request from the plaintiff to act as its media billing agency of choice. The letter states: "[LOGO IMAGE: AMI ADVANCED MEDICAL INSTITUTE OF AUSTRALIA] PO BOX xx Botany Rd Alexandria, NSW 2015 PHONE: xx xxxx xxxx FAX: xx xxxx xxxx www.AMIaustralia.com.au www.AVMD.com.au ABN:56 095 238 645 17 th October 2005 Mr Barry O'Brien Chief Executive Officer Total Advertising & Communications Pty Limited xx PYRMONT NSW 2009 Dear Sir, We wish to formally request that Total Advertising & Communications Pty Ltd act as our Media Billing Agency of choice effective 17 th October 2005. Yours sincerely, Jack Vaysman CEO" 14AMIPL, a new subsidiary of the plaintiff was registered with ASIC on 30 November 2005 and at the same time the plaintiff changed its name from "AMI Advanced Medical Institute Pty Limited" to "AMI Australia Holdings Pty Limited". The new subsidiary had an ACN 117372915. 15On or about 26 May 2006, the defendant became aware that the plaintiff had changed its name. The defendant then requested QBE to issue a credit insurance limit for the plaintiff. The certificate issued in favour of the plaintiff on 26 May 2006 did not alter the company ACN and the certificate contained a special condition that stated: "1. Cancelling and replacing endorsement previously issued in the name of ADVANCED MEDICAL INSTITUTE PTY. LTD." 16On 16 August 2006, the defendant's client address listing database was updated to record that the plaintiff had changed its name from Advanced Medical Institute to AMI Australia Holdings Pty Ltd. 17The business name "Advanced Medical Institute" was again registered to the plaintiff on 4 July 2007 and ceased on 6 October 2010. 18On 24 July 2009, the defendant changed its name from Total Advertising & Communications Pty Ltd to PDH Networks Pty Limited. 19By February 2010, the defendant was owed approximately 2.5 million for media placement services. 20On 11 February 2010, Mr Barry O'Brien, Chief Executive Officer of the defendant emailed Mr Vaisman and Mr Dilip Shrestha, the financial controller of both the plaintiff and AMIPL requesting $33,000 to progress with media bookings for the following week. A request was also made for $100,000 to pay off outstanding debt. A meeting was held that day to discuss the contents of the email. 21On about 16 February 2010, Mr O'Brien became aware that the plaintiff could not continue to pay $100,000 per week as previously agreed and a proposed repayment plan of $50,000 per week was agreed to. The defendant's insurers, QBE rejected the plan and stating they required minimum repayments of $100,000. 22On 22 February 2010, the required payments were not made to the defendant and the defendant ceased providing services to the plaintiff. 23On 3 March 2010, Mr Campbell, a director at Campbell & Associates (an advertising consultancy which first introduced the plaintiff to the defendant and which had consulted with the plaintiff for approximately 16 years), sent an email to the defendant asking it to reconsider its decision not to provide services to the plaintiff. 24On 4 March 2010, Mr Daniel Tedesco, finance director of the defendant, sent an email to Mr Shrestha requesting from the plaintiff a deadline with a repayment plan to have the whole debt paid off by a certain date. 25On 8 March, Mr Shrestha sent a proposed repayment plan to Mr Tedesco to repay the debt at a rate of $25,000 per week until 30 July 2010, with increased instalments after that time. QBE rejected the proposed payment schedule stating, "...QBE recommend that unless a revised 6 month plan is provided, PHD should commence legal action to recover their debt." 26On 10 March 2010, Mr Campbell emailed Mr O'Brien and invited the defendant to provide services to the plaintiff. The email stated, "It is quite clear that over the past few months with AMI existing on bookings made [to] last one week for the next has contributed the downturn in call levels due to the situation of buying what is left rather than planning. We have discussed this with AMI and I believe they now agree that the only way to over come this problem is to plan advertising over a 3 month (Min) period. They also agree the only way to achieve this is to pay upfront... To the end we have established a spreadsheet, which if acceptable by you, we would be able to work with that would allows us to book 3 months in advance (or even 6 months). ... I have advised AMI that, if the plan is accepted by you in the first instance, if there was ANY variation on and payment ALL planned media would be cancelled immediately. So now it's over to you to consider if this is workable or not or even if you want to get involved again at all??" 27Mr O'Brien replied stating: "... How we go forward on this is simple . PHD have the money a week in advance by Wed PM, this includes $100k off our debt a week. I (Barry O'Brien) don't get involved, no meetings with Jack etc to tell me how tough things are etc. Money well upfront and banked. Regards, Barry O'Brien Chief Executive Officer" 28On 19 March 2010, Mr Vaisman met with Mr O'Brien to discuss an outstanding amount owing for the defendant's media placement services. On that day, a repayment plan was entered into between "Advanced Medical Institute" with the defendant for repayment of an outstanding amount of $2.5 million. It was signed by Mr Vaisman. Mr Vaisman also signed the repayment plan on behalf of Mr Shrestha. The repayment schedule required weekly payments starting at $25,000 and increasing to $125,000 over the course of 32 weeks. 29On 13 May 2010, a repayment was missed according to the repayment schedule. 30On 14 May 2010, Mr Barry O'Brien Chief Executive Officer of the defendant sent an email to a number of media suppliers in Australia, which said: "Good Morning, I wanted to drop you a note as we are in the process of cancelling all activity for AMI , unfortunate but the company as most of us know have struggled financially. They were due an increase in the payment plan to us today of which they can't meet. As such we have been instructed by TI(QBE) and also Omnicom Finance to cancel activity for now and the foreseeable future. This no doubt will have a financial knock on effect with most of you covered on the note. I want to thank you all for your patience and also support given to AMI and also us through a fairly difficult time with many changes on a daily basis, rate support, cancellations and also bonus support but the inevitable on this business is closing in fast. On that note we will keep you posted on what transpires and again thank you for your support with this very difficult situation and decisions. Best Regards, Barry." 31On 31 May 2010, the defendant issued a client statement and sent it to the Accounts Department of the Advanced Medical Institute, xx William Street, East Sydney NSW. The 'debtor client' was described on the statement as "Advanced Medical Institute". According to the statement, two payments had been made to credit the account on 30 April 2010 and 7 May 2010 of $20,968.22 and $25,000 respectively. This left a balance of $2,240,981.32 outstanding at the time the statement was issued. 32A statutory demand was served on the plaintiff on 20 May 2010. It claimed the plaintiff owed the amount of $2,240,981.32 to the defendant. It was addressed to the plaintiff's registered office in Pitt Street Sydney. 33On 10 June 200 the plaintiff filed an originating process to set aside the statutory demand.

Genuine Dispute 34I turn to consider whether there is a genuine dispute within the meaning of s 459H, 'about' the existence of a debt or the amount of a debt. I was referred to a number of cases concerning the principles that apply in respect of setting aside a statutory demand. In Eyota Pty Ltd v Have Pty Ltd (1994) 12 ACLC 669 at 671; (1994) 12 ACSR 785 McLelland CJ in Equity made the following comments in respect of the expression "genuine dispute": "It is, however, necessary to consider the meaning of the expression "genuine dispute" where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the "serious question to be tried" criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit "however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having "sufficient prima facie plausibility to merit further investigation as to [its] truth" (cf Eng Mee Yong v Letchumanan [1980] AC 331 at 341), or "a patently feeble legal argument or an assertion of facts unsupported by evidence": cf South Australia v Wall (1980) 24 SASR 189 at 194. But it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACSR 362 (at 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Div 3 of Pt 5.4 of the Corporations Law , and to the terms of Div 3: 'These matters, taken in combination, suggest that at least in most cases, it is not expected that the court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute.' In Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601 at 605 Thomas J said: 'There is little doubt that Div 3 ... prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court's examination are the ascertainment of whether there is a "genuine dispute'' and whether there is a "genuine claim''. It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it), the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simple - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).' I respectfully agree with those statements." 35In Panel Tech Industries (Aust) Pty Ltd v Australian Skyreach Pty Ltd (No 2) , [2003] NSWSC 896, Barrett J stated at [17] to [18]: "[17] The test to be applied in cases of this kind has been established in several well known cases, of which those most often quoted are Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290, Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 and Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601. Those cases refer to tests of "plausible contention requiring investigation", "real and not spurious, hypothetical, illusory or misconceived" and "perception of genuineness (or lack of it)". [18] These tests, applied in the context of a summary procedure where it is not expected that the court will embark on any extended inquiry, mean that the task faced by a company challenging a statutory demand on the "genuine dispute" ground is by no means at all a difficult or demanding one. The company will fail in that task only if it is found upon the hearing of its s459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger."

Whether a contract exists 36The plaintiff contends there is no evidence as to the terms of the contract between the parties or its existence. It is submitted that the parties proceeded on a "do and charge" basis and from time to time: the defendant issued invoices, some of which were paid. The plaintiff concedes that ordinarily, such an arrangement may give rise to a liability to pay on the grounds of: an implied contract, or; an express contract with implied or oral terms, or; a common law or conventional estoppel, or; a quantum meruit claim. However, the plaintiff submits that the defendant's precise cause of action cannot be stated with any precision on the evidence and it is an issue that should go to trial. 37Although it may be convenient to have a written contract that governs the continuing business relationship between the parties that will not always be the case and it is not the case in this matter. Given that there was a continuous history of placement of orders, which were accepted and paid from time to time, there plainly was at least a series of contracts governing each placement. 38The defendant points to the fact that the supporting affidavit admits that as at March 2010 a sum of approximately $2.5m was owed and submits that this concession makes the precise terms of the contract irrelevant. The dispute is as to who owes the debt. 39In these circumstances the absence of an overarching contract does not give rise to a genuine dispute.

Demand made on the wrong entity 40The issue is whether there is a genuine dispute as to the identity of the party that contracted with the defendant. The plaintiff suggests that in the absence of any clear contractual obligation between the parties, there is a genuine dispute as to whether AMIPL or the plaintiff was the correct debtor. The plaintiff has made submissions by reference to a number of documents which are in evidence. 41The first document is a formal request that the defendant act as the media billing agency. It contains no contractual terms. The name "Advanced Medical Institute of Australia" which is on the letterhead of the formal request letter of 17 October 2005, is not the name of any company or any registered business name. Mr Vaisman provided evidence of a number of searches conducted for the name "Advanced Medical Institute of Australia". None of the searches revealed that the name had been entered on a state or federal business name register. The very similar business name, "Advanced Medical Institute" was registered to the plaintiff from 2003 to 2006 and 2007 to 2010. 42The letterhead of the formal request letter of 17 October 2005 carries the ABN of the plaintiff. It is clear that the company described on the letterhead as "AMI Advanced Medical Institute of Australia" was the plaintiff. 43Secondly, there is the question of whether AMIPL ever entered into any contractual arrangements with the defendant. The plaintiff submits that the evidence establishes that AMIPL, and not the plaintiff, had been paying the defendant's invoices in recent years. However, the plaintiff has not provided any evidence to support this assertion. 44The plaintiff suggests that the following factors point to the likelihood that AMIPL is the entity that owes the money: (a) AMIPL's history of paying the invoices sent by the defendant. (b) AMIPL sent a letter dated 5 August 2008 to media proprietors in which stated: "ADVANCED MEDICAL INSTITUTE PTY LIMITED ABN 21 117 372 915 XX Botany Road Alexandria NSW 2015 5 th August 2008 To All Media Partners, The Advanced Medical Institute has for some years now been represented in the media by its appointed media agency "Total Advertising & Communications". Who have placed all media on our behalf. ... There may be circumstances where I issue an authority for B.I.G. [an outdoor advertising company] to place an individual project, but this will be limited to the guidelines I will detail in writing for that project. ... Yours sincerely, Jack Vaisman. CEO AMI Australia" 45Given that the trading name "Advanced Medical Institute" was again registered to the plaintiff on 4 July 2007 this, if anything, supports the defendant's case. 46There is a dispute which cannot be resolved in these proceedings as to whether the letter was sent with the defendant's consent. 47The client statement annexed to the statutory demand was addressed to "Advanced Medical Institute". 48"Advanced Medical Institute" was the party to the payment schedule/proposed repayment plan dated 19 March 2010. 49The defendant submits the suggestion that the contracting party is AMIPL, not the plaintiff, is not a matter that is genuinely in dispute because: (a) There is no evidence that AMIPL and the defendant entered into a contract in late 2005. This is the case and there is only an assertion to this effect by Mr Vaisman with no evidence to support it. (b) Such a contract is inconsistent with the plaintiff's company accounts; (c) The plaintiff's financial statements for the financial years ending 30 June 2006, 2007 and 2008; as lodged with ASIC, record the bulk of revenue and advertising expense as being attributed to the plaintiff, not its subsidiaries. The amounts that are attributed to the subsidiaries are not consistent with the volumes of advertising expense that Mr Vaisman alleged were incurred by AMIPL in the period. The bulk of the trade and sundry creditors and advertising expenses are attributed to the plaintiff not AMIPL. Further, the notes record as part of the "Investment in subsidiaries" that AMIPL engaged in no trading activity for the financial years ended 20 June 2006 and 2008. 50Those financial statements record: (a) Revenue 30.6.2006 30.6.2007 30.6.2008 Consolidated 41,219,414 65,666,906 59,395,517 Parent 39,748,367 63,065,324 56,711,956 Difference 1,471,047 2,601,582 2,683,561

(b) Advertising Expense 30.6.2006 30.6.2007 30.6.2008 Consolidated 10,879,482 15,403,637 19,871,151 Parent 10,549,932 13,979,080 18,751,149 Difference 329,550 1,424,557 1,120,002

(c) Trade creditors 30.6.2006 30.6.2007 30.6.2008 Consolidated 2,089,701 1,995,540 4,363,952 Parent 1,895,617 1,792,990 4,254,020 Difference 194,084 202,550 109,932

Sundry creditors 30.6.2006 30.6.2007 30.6.2008 Consolidated 3,639,231 4,247,215 4,825,767 Parent 3,631,916 4,239,560 4,825,767 Difference 7,315 7,655 Nil

(d) Any retainer of the defendant by AMIPL could only have arisen on or after 30 November 2005 , being the date that AMIPL came into existence. The only written retainer in evidence is the letter dated 11 March 2004 (above). (e) It was suggested that a contract with AMIPL was unlikely given that the defendant never maintained trade credit insurance for AMIPL. The plaintiff was the company for whom trade credit insurance with QBE was maintained until early 2010. All discussions concerning the alteration of the repayment arrangements in respect of the 2.5 million owing in February 2010, only took place after the plaintiff had received approval from QBE as a trade credit insurer. However, this is not of assistance on this aspect as the relevant matters are those concerning the interaction between the relevant parties. (f) The client address information contained in the defendant's database of client listings contains only historical references to the plaintiff as its client not AMIPL. This also is not a relevant consideration. 51However, all the invoices for the services the subject of the demand were issued by the defendant and addressed to the plaintiff. The fact that some unidentified invoices (a small proportion) may have been paid by AIMPL is not relevant to who were the contracting parties. In particular, if one has regard to the plaintiff and AIMPL's accounts, the suggestion that AIMPL was the contracting party is simply not right and in my view, the assertion is so patently unsupported it does not amount to a genuine dispute.

There is no "debt" 52The plaintiff suggests that this is not a case where a contract creates an obligation to pay a particular amount and suggests that if there was a claim in contract (as opposed to quantum meruit or estoppel), the terms of the contract are substantially or almost entirely implied. The plaintiff submits that the defendant cannot point to a term that imposes an obligation to pay a fixed sum of money. Therefore, the defendant's claim is incapable of being a debt within the meaning of s459E and the defendant's claim is limited to a claim for breach of an implied term, the quantum of which needs to be ascertained in a proceeding. 53The plaintiff also suggested that a claim for quantum meruit could not found a demand. How the present debt might be a quantum meruit claim was not articulated. 54A quantum meruit claim only exists if there is no genuine agreement, or it the agreement is frustrated, avoided or unenforceable: Pavey & Matthews v Paul (1986) 162 CLR 221 at 256-7. No such suggestions appear in the supporting affidavits. 55There have been a number of cases that deal with the word debt in the context of demands under the Corporations Law (Cth) and its predecessors. As I said in Reinsurance Australia Corporation v Odyssey [2000] NSWSC 1118, the first of these is Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] 2 Qd R 85; (1988) 6 ACLC 1199. That was a decision of McPherson J of the Supreme Court of Queensland who was considering a notice under s 364 of the Companies (Queensland) Code . That provision required that there must be a "creditor to whom the company is indebted in a sum exceeding $1,000 then due..." His Honour took the word "indebted" to mean a liquidated sum in money presently due owing and payable by one person called the debtor to another person called the creditor. After dealing with some of the facts, his Honour went on deal with what was a debt at common law, which would support an action in debt or indebitatis assumpsit. He indicated that there were three ways in which a debt could arise. They were:

By judgment;
By deed under seal; and
As quid pro quo for a consideration that was executed. 56The factual circumstances related to a promise to pay a sum to a third party. His Honour found that the arrangements did not give rise to a debt, which he saw as importantly different from a claim for breach of contract. 57The next case is First Line Distribution Pty Ltd v Paul Whiley & Ors (1995) 13 ACLC 1216. This was a decision of Cohen J of the Supreme Court of New South Wales and was concerned with a contract that gave a right to distribute and sell the plaintiff company's products. The company was paid money by the defendants for the distribution rights and under the contract the defendants delivered the company's goods. For a while the defendants bought stock from the company but the company became unable to continue to supply the goods. The statutory demand, under the Corporations Law , claimed that the monies that had been paid for the right to distribute the company's products were now debts owing to the defendants. His Honour referred to the fact that contingent or respective liabilities may not be the subject of a statutory demand. He pointed out that the defendant would be entitled to claim damages for breach of the agreement. His Honour went on to say: "However, as none of the defendants have brought an action for damages there is no judgment debt against the company, the company's claim is, and was at the time the demand was served, merely one for unliquidated damages. The amount of damages has not been ascertained and the company does not owe a debt to any of the defendants until then." 58Plainly, claims for damages for breach of contract for unliquidated claims are not susceptible to creating a debt for the purposes of a statutory demand. 59In Hansmar Investments v Perpetual Trustee [2007] NSWSC 103; (2007) 25 ACLC 282 at 291, White J considered that a promise under contract to pay a specific or readily calculable sum was properly characterised as giving rise to a debt in that sum. It was a claim for liquidated damages. 60A case which is useful for its explanation of what is a debt for the purpose of the present provision is Vimblue Pty Ltd v Toweel t/as Carpenters Core Building [2009] NSWSC 494. After referring to the words of McPherson, in Rothwells , which I quoted above, Barrett J said: " [14] It may be noted that McPherson J referred to a "liquidated sum", not a "liquidated demand". The nature of a "liquidated sum" was explained by Knox CJ and Starke J in Spain v Union Steamship Co of New Zealand Ltd [1923] HCA 21 ; (1923) 32 CLR 138 at 142 by quoting from the then current edition of Odgers on Pleading: Whenever the amount to which the plaintiff is entitled ... can be ascertained by calculation or fixed by any scale of charges or positive data it is ... liquidated. [15] There was reference in Spain's case to Stephenson v Weir (1879) 4 LR Ir 369. It was held in that case that a common count claim for work done was a "liquidated demand". Palles CB said at 372: [D]emands for work and labour on a quantum meruit, or for goods sold, although the price was not fixed by contract, are clearly "liquidated demands"; ... when the value of the work or the goods as the case may be, is ascertained, that value determines and therefore liquidates the claim. [16] This statement identifies the distinction between "liquidated claim" or "liquidated demand" and "liquidated sum". A process of valuation or assessment or the application of some standard of measurement is necessary to cause the latter to emerge from or be distilled from the former. [17] The process by which a claim is translated into a right to a liquidated sum was described by Cohen J in Re Ahearn; Ex parte Palmer (1906) 6 SR (NSW) 576, a case concerning an unliquidated claim. His Honour said at 577: For failure to meet his contracts he was liable in damages, and, so long as it rested in damages, the liability was not a liquidated sum; before it could become so, it would have to be assessed either under the Stock Exchange rules, or by the ordinary tribunals, or by agreement between the parties, for the parties may meet and agree upon an amount which one shall be deemed to owe the other. There is no special virtue in having the amount assessed by a Court or a domestic tribunal, for an assessment between the parties is equally efficacious for the purpose of constituting the amount a liquidated sum. [18] The same reasoning applies to a liquidated claim upon a quantum meruit for work done. In the Irish case to which I have referred, Palles CB held that an action for debt is maintainable upon such a claim, adding at 373: When it was said that an action of debt would lie only for a sum certain, it was sufficient that the sum should be capable of being ascertained by a jury by positive data, and not merely measured by opinion or conjecture. In the present case, for instance, when the value of the work was ascertained, the sum to be recovered became definite, and the case would not be like one of assault in which there were not any certain data to fix the amount of damages. [19] The words of particular importance in this passage are, "when the value of the work was ascertained, the sum to be recovered became definite". "Definite", in the context, is synonymous with "liquidated" [20] If a mechanic spends half an hour repairing my car and there is no agreement between us as to the amount he will charge and I will pay, his subsequent claim for $1 million may be regarded as a liquidated claim. But no liquidated sum is thereby owing, due and payable by me to him. His entitlement is to be paid a reasonable sum upon a quantum meruit. Until the value of the work is ascertained and in the absence of some process that fixes what is reasonable according to what Palles CB called "positive data", as distinct from "opinion or conjecture", the liquidated claim does not mature into an entitlement to a liquidated sum." 61The evidence in this case does not disclose the processes used to place orders and whether that was done by reference to agreed rates. It will be noted that Cohen J in Re Ahearn said that there is no special virtue in having a court assessing the amount and that "an assessment between the parties is equally efficacious for the purpose of constituting the amount of a liquidated sum". 62In this case the affidavit of Mr Vaisman of 10 June 2010 makes it clear that by mid March 2010 the total amount owing was approximately $2.5 million. In the proposed repayment plan on 19 March 2011 on behalf of "Advanced Medical Institute" (which must refer to the plaintiff) the amount owing was fixed at $2.5 million. This plainly is the type of agreement to which Cohen J refers and in my view the debt is a liquidated sum which can be the subject of a statutory demand.

The debt is not due and payable 63By 22 February 2010, when $2.5 million was owed, the defendant stopped providing services to the plaintiff. In a meeting on 19 March 2010, the defendant required a repayment schedule to be signed by the plaintiff in respect of the outstanding debt. The defendant also required future advertising to be paid for in advance. Mr Vaisman said the conversation was in these terms: "On Friday, 19 March 2010, I met with Barry O'Brien of PHD in his office at Level 2, 439-441 Kent Street, Sydney in order to discuss the outstanding amount owing and we had a conversation with him to the following effect: O'Brien: "Jack, our insurance company wants us to put a schedule in place in relation to the reduction of the amount outstanding. In addition, all new bookings will not be covered by insurance and need to be paid for in advance." Vaisman: "The amount they are asking us to pay on a weekly basis will be extremely difficult. I am not certain I can make the weekly increases they are seeking. What will happen if I am unable to make a payment?" O'Brien: "If that occurs, we will sit down and have a cup of coffee and agree a variation to the schedule." Vaisman: "Thank you. We will continue to send you ongoing business and will do the best we can to reduce the amount owed as quickly as possible." O'Brien: "No problem. I will have my accountant Daniel Tedesco prepare the schedule." 64The terms of this conversation are in issue and they cannot be resolved on this application for the purposes of considering the matter. 65The conversation led to the signature of Mr Vaisman on the following document: "Advanced Medical Institute Proposed Repayment Plan 19th March 2010 Debt repayments to be made each Friday from 26th March 2010 via EFT transfer. Bank receipt to be received by PHD no later that 12noon each Friday Week Payment Date Payment Amount

1 26-Mar-l0 $25,000 2 2-Apr-10 $25,000 3 9-Apr-10 s25,000 4 16-Apr-l0 $25,000 5 23-Apr-10 $25,000 6 30-Apr-10 $25,000 7 7-May-l0 $25,000 8 14-May-10 $50,000 9 21-May-l0 $50,000 10 28-May-10 $50,000 11 4-Jun-10 $50,000 12 11-Jun-10 $100,000 13 18-Jun-10 $100,000, 14 25-Jun-10 $100,000 15 2-Jui-10 $100,000 16 9-Jul-10 s100,000 17 16-JuI-10 $100,000 18 23-Jul-10 $100,000 19 30-Jtil-l0 $100,000 20 6-Aug-l0 $100,000 21 13-Aug-10 $100,000 22 20-Aug-10 $100,000 23 27-Aug-10 $100,000 24 3-Sep-10 s100,000 25 10-Sep-10 $100,000 26 17-Sep-10 $100,000 27 24-Sep-10 $100,000 28 1-Oct-10 $100,000 29 8-Oct-10 $100,000 30 15-Oct-10 $100,000 31 22-Oct-l0 $100,000 32 29-Oct-l0 $125,000

I agree with the above repayment plan and endeavour to meet the scheduled repayments to PHD in line with the above. Jack Vaisman Dilip Shrestha Chief Executive Officer per: Chief Financial Officer" 66Although Mr Vaisman in his affidavit suggested that he was signing for Mr Shrestha on behalf of AIMPL that does not appear in the document. By use of the business, name the plaintiff, not AMIPL was a party. 67The plaintiff submits that the entity that entered into the payment schedule was AMIPL and there is a factual conflict between the notion that the plaintiff owes the debt and the fact that AMIPL entered into the payment schedule and made the first seven payments under that agreement. It is further submitted that even if there was some pre-existing arrangement by which the plaintiff would be liable to pay, the parties had varied that arrangement and confirmed that AMIPL was liable. 68The defendant's argument on this ground is that there is no claim in that affidavit that there was any change in obligation at the time the schedule was signed off. In any event, there is no basis for concluding that the parties took the step of changing the obligor and it is not supported the evidence. This assertion seems to be based upon the reference to "Advanced Medical Institute" on the schedule, which, the evidence shows, was the business name of the plaintiff at the time the schedule was prepared and signed. 69Further, the defendant submits that the argument is irrelevant unless the Court is satisfied there is a genuine argument that there was a tri-partite novation. Mr Vaisman's most recent affidavit does not suggest a change of debtor entity of this nature, but he has recognised that the obligor is the plaintiff in paragraphs 7 and 8 of his affidavit dated 26 November 2010. In those paragraphs, Mr Vaisman makes reference to the payment schedule and states: "7. ...I received this document from Barry O'Brien who handed it to me at the meeting... I understaood from what was said at the meeting that the defendant agreed that it would vary the then existing payment plan if the situation eventuated that the plaintiff was making, and in a position to make, reasonable payments to the defendant, notwithstanding that those payments were less than the payments actually due under the existing payment plan. 8. I had a conversation with Barry O'Brien on numerous occasions after I first saw his proposed payment schedule... That conversation included words to the following effect: Jacov: "Barry, this schedule is too difficult. It is unlikely that we will be able to meet it. But let me try. What will happen if we can't pay according to your schedule?" Barry: "It's okay, don't worry. We will sit down again to have a cup of coffee and discuss to see what can be done." I understood from these conversations that Barry O'Bren was confirming my interpretation of what would happen if the plaintiff could not meet the required payments under the then existing payment plan, but was still in a position to make reasonable and sustained payments to the defendant." 70In my view the suggestion of some change in identity is not supported. 71The first series of payments in the schedule were made and there were no more payments. The plaintiff's submissions on what happened next were as follows: "The parties settled on a payment schedule. That schedule is at annexure "F" (page 42 of the 10 June affidavit of Mr Vaisman; CB 286). The plaintiff alleges that it was a term of that agreement that, if the plaintiff had difficulty in meeting the payment plan, the parties would negotiate in good faith with a view to arriving at a new payment plan. There is no mechanism for the entire debt becoming due and payable, or contractual trigger. Prima facie, only the payments which were, according to the schedule due at the time the demand was issued were due and payable: Carter, Peden & Tolhurst Contract Law in Australia (5 th Ed, Lexis Nexis Butterworths) at [37-06], pg 870. Such an action would require a claim for damages, with a discount for the time value of money (Carter at [36-16], pg 854). The entire debt did not become due and payable, but only those who became payable in accordance with the schedule. The document was prepared by the defendant, and should be construed contra preferentum . It is signed by both parties, and plainly intended to have legal effect." 72The defendant suggests that the plaintiff's submissions are uncommercial and highly improbable, particularly in view of the fact that the debtor owed $2.5m and according to the plaintiff's submission this would mean that the defendant bound itself to give up any right to recover the $2.5m immediately, whether the payment schedule was met or not. The plaintiff's contentions would have the result that the defendant committing itself to negotiate in good faith to achieve a new, presumably, less advantageous payment plan, if the schedule of payments was not met. The defendant suggests there is no consideration to support any promise allegedly amounting to a contract. It is argued that a 'commitment' to repay by instalments a debt that was already owed, does not amount to fresh consideration. 73The defendant also contests the conversation in which the alleged representations took place and states that Mr Vaisman's version of events is inconsistent with all of the contemporaneous documents and events from before and after the date of the meeting. Mr O'Brien had no desire to entertain further discussion with Mr Vaisman and the defendant was dependent upon receiving the approval of QBE to any repayment schedule, so as to avoid the salvage provisions of the insurance contract in respect of future work. 74The answer to this aspect of the matter is the fact that the agreement was not an accord and satisfaction and thus there was no consideration. The evidence on the plaintiff's version does not suggest any compromise in the amount to be paid. There is no promise not to sue and is nothing more than an indulgence granted in respect of debit which is due. The payment schedule does not raise any genuine dispute.

The defendant is the plaintiff's agent 75The plaintiff contends that if the document allegedly giving rise to the retainer is found have contractual effect, it appoints the defendant as the plaintiff's agent. This interpretation means that, at law, the defendant had the power to enter into contractual arrangements on behalf of the plaintiff or AMIPL. What is said to follow is that when the defendant (as agent) secured an advertising engagement on behalf of the plaintiff as principal, the contract was between the media proprietor and the plaintiff. In circumstances where the agent contracted for advertising services on behalf of the principal, the principal would owe the media proprietor directly. There is no debt owed to the defendant directly. 76It is suggested that the facts of the case have much in common with CFTO-TV Ltd v Mr Submarine Ltd (994) 108 DLR (4 th ) 517 (affirmed (1997) 151 DLR (4 th ) 382 and cited with approval by Finn J in South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611; [2000] FCA 1541). 77The defendant submits that this ground is not available on this application, on the basis that it is only put forward in support of a suggestion that no debt is owed to the defendant (but to the media outlets) and the supporting affidavit conceded that a debt was owed to the defendant. 78It is a classic example of the principle referred to in Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452. 79The authorities on this area have shifted over the years and a recent reference to it is contained in the decision of Barrett J in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143 at paragraphs 22 to 25 in these terms: "22 It was submitted on behalf of the defendant these alleged deficiencies could not be raised by way of challenge under section 459J (1) (b) because they were not identified in either of the affidavits supporting the section 459G application that is, Mr Hagan's affidavit of 7 August 2007 and Mr Busby's affidavit of 31 July 2007. The defendant thus calls in aid of the principle emerging from Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452 according to which an applicant under section 459 G is limited to grounds appearing from the supporting affidavit or affidavits filed and served within the period of 21 days mentioned in that section. 23 Valuable discussion of this principle and its precise content may be found in the recent judgement of White J in Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321. In that case, his Honour regarded as too strict the approach taken by me in Process Machinery Australia Pty Ltd v ACN 057 262 590 Pty Ltd [2002] NSWSC 45 and Elm Financial Services Pty Ltd v Macdougal [2004] NSWSC 560. White J was of the view that my observation to the effect that the ground of challenge must be raised expressly in, or appear by necessary inference from, the supporting affidavit suggested too demanding a requirement. He referred, in connection, to observations of Austin J in POS Media Online Ltd v B Family Pty Ltd (2003) 21 ACLC 533 to the effect that the approach I had taken in Process Machinery arguably took the observation of Sunberg J in Graywinter further than they were taken by the Court of Appeal of the Supreme Court of Western Australia in Energy Equity Corporation v Sinedie Pty Ltd (2001) 166 FLR 179 and might be inconsistent with Callite Pty Ltd v Adams [2--1] NSWSC 52. 24 White J then dealt with the case of a ground obvious on the face of an identified document but not expressly enunciated in the supporting affidavit. In the POS Media case, Austin J had inclined to the view that, if the relevant document (such as an agreement) was annexed to the supporting affidavit, a ground obvious on the face of the document would be available even though not mentioned or suggested in the text of the affidavit (I had indicated in Process Machinery that the text would have to say something about the relevant matter). Austin J did not need to decide the point but it became the subject of the following observations of White J in the Hansmar case by reference to the decision of Santow J in Callite Pty Ltd v Adams : '[3] Such a mode of reasoning would be consistent with Callite . There, a solicitor served a statutory demand demanding payment of an amount of unpaid legal costs. One of the grounds of challenge to the demand was that the solicitor had failed to make the disclosure required by section 175 of the Legal Profession Act 1987 (NSW). Santow J (as his Honour then was) held that this ground of challenge was not available because no facts were deposed to from which one could infer that there was no fee disclosure and the costs agreement. However, the affidavit did deposed to the receipt of accounts and those accounts were annexed. Santow J held (at [10]) that a perusal of the accounts showed that they lacked the prescribed statutory content as required by section 192 of the Legal Profession Act and a regulation 22A of the Legal Profession Regulations 1994 (NSW). Section 192 of the Act precluded any action being taken for recovery of costs until 30 days had passed after the provision of a bill of costs which complied with the Act. Santow J held (at [12]) that the legal consequences which flowed from the form in which the accounts were rendered were not required to be pleaded in the affidavit. His Honour set aside the statutory demand on the basis that public policy precluded a statutory demand being used to bypass the safeguards of the Legal Profession Act . [32] I doubt that it could be said that in Callite it was a necessary inference from the affidavit that this ground of challenge was raised. However, it was an available inference, so that it could fairly be said that the ground was raised in the supporting affidavit.' 25 With the benefit of the analysis by Austin J in POS Media and White J in Hansmar Investments , I am persuaded that my earlier approach is indeed too strict. In the Graywinter case itself, the minimum requirement with respect to a supporting affidavit was said by Sunberg J to be that it must 'contain a statement of the material facts on which the applicant intend to rely to show a genuine dispute' [emphasis added]. That was, of course, a section 459H (1) case. But the samne reasoning applies where the challenge is under section 459J. In endorsing the approach taken by Sunberg J, the Full Court of the Supreme Court of Western Australia, in Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd [2001] WASCA 360, said that the supporting affidavit is 'required to reveal a genuine dispute' [emphasis added]. These statements, coupled with the approaches taken by Austin J and White J and the decision of Santow J in Callite , persuade me that a ground is "raised", as referred to in Energy Equity , if the ground is evident from the supporting affidavit, even if only because it can be discerned from some annexed document the content of which "reveals" it." 80There is nothing in the initial affidavit or the annexures which reveals such a claim as the present. 81The suggestion appears to be a lawyers' construct. Mr Vaisman has nowhere suggested that this construct reflects the reality of media placement. In addition the evidence demonstrates that the media buyer (in this case the defendant) has the obligation as a principal to the media outlet and, in the present case, the defendant has paid the media organisations for the advertisements published/broadcast for the benefit of the plaintiff, and is owed money by the plaintiff. 82The matter cannot be considered and even a consideration of it demonstrates that there is no genuine dispute.

Offsetting claim: breach of agreement to renegotiate 83The plaintiff appears to put this offsetting claim on two bases: breach of contract resulting in damages and misleading conduct. Clearly there was no renegotiation as contemplated in the schedule. 84The plaintiff submits that even if the agreement to renegotiate the payment schedule in the event of cash flow difficulties did not prevent the debt becoming due and payable, a breach of that agreement gives rise to an offsetting action for damages. The defendant submits the plaintiff has not claimed an amount of loss and damage referrable to any breach of this promise , or explains how loss or damage could be suffered through breach. The defendant suggests that that as a consequence, the claim may be ignored: Broke Hills Estate Pty Ltd v Oakvale Wines Pty Ltd [2005] NSWSC 638; National Telecoms Group v Bulldogs Rugby League Ltd [2003] NSWSC 654. However, given the lack of consideration from the plaintiff, the breach of contract claim can be put to one side. 85Alternatively, the plaintiff submits the defendant's assurances, set out in paragraphs 14 and 16 of Mr Vaisman's affidavit affirmed 10 June 2010, constitute misleading or deceptive conduct in trade or commerce: s 52 Trade Practices Act 1974 (Cth). At trial, the defendant would have the onus of establishing that it had a reasonable basis for making the representations as to future fact: s 51A(2) of the Trade Practices Act 1974 . 86Mr O'Brien acknowledges in paragraph 5 of his 8 December 2010 affidavit that many media outlets will only deal with an agency and the plaintiff submits that the inability to effectively advertise at its required level has lead to a downturn in business. Although the plaintiff group continued to mitigate its loss by advertising where it could, its spending on advertising decreased. Between 5 February 2010 and 11 June 2010, those entities spent around $2.3 million (paragraph 16 of Barry O'Brien) compared with $19.9 million in 2008 (CB pg 938). 87The relevant test for a genuine offsetting claim is discussed by Brereton J in BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd (2008) 68 ACSR 1 at [4] "[4] The test for determining whether there is a genuine offsetting claim is whether the court is satisfied that there is a serious question to be tried that a party has an offsetting claim ( Scanhill Pty Ltd v Century 21 Australasia (1993) 47 FCR 451 ; 120 ALR 173 ; 12 ACSR 341 ) or that the claim is not frivolous or vexatious: Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 . In other words, the claim must be bona fide and a truly existing fact and not spurious, hypothetical, illusory or misconceived: Ozone Manufacturing Pty Ltd v DCT (2006) 94 SASR 269 ; [2006] SASC 91at [46] . In Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 ( Macleay Nominees ), Palmer J put it in the following terms ( at [18] ): [18] In my opinion, a genuine offsetting claim for the purposes of [Corporations Act] s 459H(1) and (2) means a claim on a cause of action advanced in good faith, for an amount claimed in good faith. "Good faith" means arguable on the basis of facts asserted with sufficient particularity to enable the Court to determine that the claim is not fanciful. In a claim for unliquidated damages for economic loss, the Court will not be able to determine whether the amount claimed is claimed in good faith unless the plaintiff adduces some evidence to show the basis upon which the loss is said to arise and how that loss is calculated. If such evidence is entirely lacking, the Court cannot find that there is a genuine offsetting claim for the purposes of s 459H(1) and (2)." 88The defendant submits that if the alleged statement is a representation, damages would be assessed by reference to what would have been the position had the representation not been made. It is submitted that the plaintiff has not provided evidence as to what it would have done if the representation were not made. At the time of the alleged representation, the money was owed. All that was achieved by the signing of the document was to give the plaintiff the benefit of time (by way of indulgence) to pay off that presently owed debt. 89Even if an offset is found to be genuinely available to the plaintiff, the Court will need to determine the amount to be allowed for such an offsetting claim. 90The claim for damages was put in this way. 91Annexure "H" to the 10 June 2010 affidavit of Mr Vaisman provides a schedule of losses for the week ending 5 June 2010. The plaintiff submits this clearly expresses damages that will be incurred on an ongoing basis. The schedule is as follows: WEEK ENDING WEEKLY INCOMING CALLS AFTER 8 MAY 2010 NO. OF CALLS DROPPED REVENUE IMPACT WEEKLY PROFIT IMPACT 15 May 2010 3076 194 $58,200.00 $23,280.00 22 May 2010 2915 355 $106,500.00 $42,600.00 29 May 2010 2986 284 $85,200.00 $34,080.00 5 June 2010 2894 376 $112,800.00 $45,120.00 TOTAL 1209 $362,700.00 $45,080.00

92That evidence is supplemented by the affidavit of Mr Vaisman of 26 November 2010, paragraphs 25 to 27. At [27] he states: "The plaintiff continues to suffer on average for each lost call a reduction in revenue of $300.00 and profit of $120.00" 93The calculation of the downturn in business, which the plaintiff claims on the second limb of Hadley v Baxendale , is as follows: Weekly Reduction in Calls 194 - 355 Reduction in Profit $23,280 - $42,600 Number of Weeks 30 Total Loss $698,400 - $1,278,000

94Further evidence to support this assessment of damages is the BAS returns of the two companies, which are exhibited to the affidavit of Dilip Shrestha affirmed 10 December 2010. They show a drop in sales between May and June 2009, which continues through the accounts of Advanced Medical Institute Pty Ltd (para 9 of Shrestha). There was an objection to some of this material on the Graywinter principle but I would allow it as it merely fleshes out the claim for damages made in the initial affidavit. 95There is no obligation on a party seeking to have a statutory demand set aside to prove the claim "to the last dollar and cent": Elm Financial Services v Macdougal [2004] NSWSC 560 at [19]. 96According to the defendant, the plaintiff has failed to articulate any rational connection between this damages claim and the alleged breach. A claim for damages for breach of promise to renegotiate could only be measured by reference to the prospects of a successful renegotiation. The evidence does not suggest that the plaintiff was prepared to agree to a different payment schedule that would have been within an acceptable range for the defendant or its insurer. Mr Vaisman alleges that he disclosed a preparedness to repay on the reduced rate of $25,000 per week, which he records as being rejected out of hand by Mr O'Brien. All of the objective documents record that QBE required repayment of $100,000 per week, but was prepared for a short period to accept $50,000 per week. 97Further, the defendant submits that the plaintiff has failed to adduce evidence that would disclose an ability to meet any agreed repayment regime. So, even if a breach could be established, there is no rational basis upon which the Court could conclude that more than nominal damages would flow from it. I agree with these submissions.

Offsetting claim for the defamatory email 98The plaintiff complains about an email that was sent by Mr O'Brien on behalf of the defendant on 14 May 2010, to a number of media suppliers in Australia (set out at [30] above). It claims to have a cause of action under the tort of injurious falsehood and a claim for damages under s 52 of the Trade Practices Act . 99It is submitted that each of the elements of the tort of injurious falsehood are established on the evidence to the level required for a statutory demand. The statement is in writing and it is plain that it was made. The evidence of malice is at paragraphs 22-24 of the first affidavit of Mr Vaisman. Any conflicting oral evidence cannot be resolved on the present application. On that evidence, the statement was plainly intended to cause harm. As the letter at annexure "I" of Mr Vaisman's affidavit makes clear, the statement could be false in two key respects. Importantly there is a clearly available imputation in May 2010 that a corporate failure was imminent. This has been proved to be wrong. 100It was submitted that the claim under s 52 of the Trade Practices Act has a proper basis. Representations made to consumers are regularly actionable: Mark Foys v TVSN (Pacific) [2000] FCA 1626; (2000) 104 FCR 61 at 73; Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45; 46 IPR 481; Parkdell Custom Built Furniture v Puxu (1992) 149 CLR 191 at 197. Further, the reliance does not have to be reliance by the applicant to grant a claim for damages under section 82; it is only necessary that that damage be caused by the conduct: Jamssen-Cilag v Pfizer (1982) 37 FCR 526 at 530; 109 ALR 638; Haynes v Top Slice Deli (1995) ATPR (Digest) 46-147 at 53,151-2; Hill v Tooth & Co [1998] ATPR 41-649 at 41,222; See also Marks v GIO Australia Holdings (1989) ATPR 41-665 and Hampic v Adams [1989] NSWCA 455; (2000) ATPR 41-737 at 40,550. It is not an element of the contravention that the defendant intended to mislead or deceive: Parkdale Custom Built Furniture v Puxu (1982) 149 CLR 191 at 197; Hornsby Building Information Centre v Sydney Building Information Centre (1978) 140 CLR 216 at 228. 101The basis of the claim for damage in respect of both claims is said to be the same as the claim for damages caused by the breach of agreement to negotiate. 102In terms of quantification of an offsetting claim, the plaintiff carries the onus. In Elm Financial Services Pty Ltd v Macdougal [2004] NSWSC 560 Barrett J said of that onus (at [19)]: "[18] There is then, however, the question of quantification. It is necessary, in view of the definition of "offsetting total" in s 459H(2) and its reference to "the amount of that claim", that the party alleging the existence of an offsetting claim, as a basis for an order setting aside a statutory demand, takes steps to quantify it. The matter is dealt with in Jesserson Holdings Pty Ltd v Middle East Trading Consultants (1994) 12 ACLC 490. In No 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146 , I referred to that necessity in these terms: The first thing to be said about the way the plaintiff puts its case is that, while the definition of "offsetting claim" in s 459H(5) refers, in general terms, to a claim "by way of counterclaim, set-off or cross-demand", it is clearly contemplated by the section as a whole that the claim must be one capable of being quantified in money terms. It need not be a liquidated claim but it must be one to which a monetary liability can be attached. This is because of the directive in s 459H(2) that the court determine, among other things, "the amount of that claim" or, where there are several claims, "the total of the amounts of those claims". It follows that only claims sounding in debt or damages or other monetary consequences (such as may be available under the Trade Practices Act) may be taken into account for the purposes of s 459H. [19] Despite this clear need, according to the terms of the legislation, to quantify an offsetting claim in money terms, it is not necessary that the party seeking to have the statutory demand set aside should particularise the amount of the claim to the last dollar and cent. There may be various ways of approaching the issue of assessment at this early stage. It is sufficient that there be, on the evidence, a plausible and coherent basis for asserting a claim to a sum which, despite elements of uncertainty, can be seen to be, in any event, greater than the amount of the debt the subject of the statutory demand. Of course, the narrower the margin between the alleged debt and the plaintiff's estimate or initial quantification, the greater will be the need for particularity in assessing the amount of the offsetting claim." 103The defendant submits that in a case such as the present, where an offset in the millions of dollars is potentially claimed, a great need for particularity will be needed to discharge the onus upon the plaintiff, even if the claim is not to be measured down to the last dollar and cent. It is said that Mr Vaisman's assertions as to his ability to deal with media outlets have not been supported by evidence. Mr Vaisman gave the following evidence about the difficulty in placing advertisements in these terms: "Damages: May - June 2010 onwards. 21. The nature of AMIPL's business model is that it depends heavily on new business (as opposed to repeat business). The main way it attracts new business is by advertising. I know from my conduct of the business of AMIPL that there is a close correlation between the advertising and the number of new business enquiries. If AMIPL does not advertise, its business and revenue drop off to a very large degree. 22. Since about May 2010, the plaintiff and AMIPL have been unable, despite extensive efforts, to obtain media placements on many of the mainstream and mid-tier commercial television and radio stations, either on their own account or with the assistance of a third party media broker. 23. Since about June 2010, the plaintiff and AMIPL have used the services of the third party media broker Mr Paul Koch. 24. Recently, Mr Paul Koch and I have had conversations in words the following effect: Paul: "I am having difficulty obtaining air time for AMI." Jacov: "Why is that? Paul: "Most of the mainstream television and radio stations think that AMI is in poor financial shape. They will not deal with AMI." Jacov: "What about offering to pre-pay for advertising? " Paul: "It does not help. I have tried that. They will not have anything to do with AMI. They are saying they will not take bookings until you resolve matters with PHD" Jacov: "What can you do for AMI then? " Paul: "I am only able to get air time with the second-tier television and radio stations." Jacov: "What about the mainstream television and radio stations?" Paul: "I can only get air time with them if I book without mentioning that the ad is for AMI." 104The defendant points to a spread sheet from AC Nielsen (O'Brien 8.12.2010 para 16) which records that for the period 2 May 2010 to 6 November 2010: (a) The debtor spent $2,340,000 on advertising; and (b) A significant portion of the $2,340,000 was spent with mainstream and mid-tier television and radio stations. 105The defendant's submissions in respect of this evidence was as follows: "Given this evidence, the plaintiff has made no attempt to rationally explain the relationship between any alleged reduction in calls and any lack of access to particular media; save the bald assertion that the significant drop was caused by the cancellation to media placements (a matter in contest) and the alleged disparaging comments. Further, the plaintiff has made no attempt to explain the relationship between the revenue or profit impact of a 'dropped' call (at this stage the figures cited are by way of mere assertion, despite the attempt in reply to perform a mathematical exercise). Further, there has been no serious attempt to establish a basis for concluding a substantial loss has been suffered. One has the mere assertion from Mr Vaisman that the call levels are still at low levels, and claims of loss on that basis. That does not sit with the fact that as a matter of objective proof, millions of dollars of media is being arranged. The short point is that the plaintiff is presumably in a position to provide a reasonable level of explanation of the basic aspects of its claim, which explains these subject matters by reference to the level of media that is sought to be purchased and is being rejected. The fact that it has chosen to not explain itself points to the lack of genuineness of this claim. 106What the submission does not deal with is the fact that before this period the plaintiff had been spending in the order of $10 million per annum for advertising. 107Plainly there are difficulties in establishing the plaintiff's loss on the present evidence. However, there does seem to be some proof of a difficulty to advertise due to the email. The claim for damages is for 30 weeks from 15 May 2010. It is hard to imagine the damage continuing for an extensive time given the companies continued survival. 108I will allow an offsetting claim of $250,000 in respect of this aspect of the matter.

Defects in the affidavit 109The affidavit accompanying the creditor's statutory demand incorrectly spells out the defendant as "PHD NETWORKS AUSTRALIA PTY LTD". The description of the deponent incorrectly identifies the defendant by leaving the 's' off the word Networks. However, paragraph 1 of the affidavit correctly identifies the company making the demand. The demand itself also correctly identifies the company making the demand. Further, the affidavit is not correctly witnessed because the witness has not inserted his or her name in accordance with UCPR 35.7A. 110Although defects in affidavits are dealt with under s.459J(1)(b), the test for defects in the affidavit is similar to the test for defects in demands: Kezarne v Sydney Asbestos Removal Services (1998) 16 ACLC 1609 at 1614. In relation to the demand itself, defects in the names of parties have been viewed more seriously than other defects: Re Marco Constructions Pty Ltd (1992) 10 ACLC 1722; Re Scandon Pty Ltd (1995) 14 ACLC 124; Hornett Aviation Pty Ltd v Ansett Australia Ltd (1995) 13 ACLC 613. 111In this case when dealing with defects in an affidavit, s 459J(2) applies and the definition of defects includes misdescription of a person or entity. No question of confusion is mentioned in the evidence and taking into account the correct description in the demand I would not set aside the demand because of these defects. 112The error in the witnessing of the affidavit is a failure to comply with the rules of court (s 459E(3)(b); Corporations Rule 2.6, UCPR 35.7A). In Carb Royale Pty Ltd v Tonkin (2000) 35 ACSR 652; [2000] VSC 482 a similar problem arose. During the proceedings evidence was given of the name of the witness and the court did not set aside the demand on this ground. Here the witness is a solicitor and he has given his address. It is apparent from the demand that this address is the address of Turks Legal, which is the solicitor for the person issuing the demand, so he can be identified. In these circumstances I will not set aside the demand on this basis.

Conclusion 113I am satisfied that there is an offsetting claim in the sum of $250,000. This means that there is a substantiated sum of $1,990,981.32. 114The order I make is: I vary the demand dated 19 May 2010 by reducing it to $1,990,981.32 as from the date when it was served on the plaintiff. 115I will hear the parties on costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 March 2011

Trade Practices Act 1974(Cth)

Legal Profession Act 1987(NSW)

Legal Profession Regulations 1994(NSW)

At a glance

Court

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Before

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Judgment (21 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (33)